BRUSSELS (AP) — The debt crisis shook Europe's core on Tuesday as market fears grew over the stability of Spain and Italy, forcing a rethink of the currency union's strategy to restore trust in its future.

Markets took a nosedive on worries that the eurozone's third and fourth biggest economies — both too expensive to save with Europe's rescue funds — may become the crisis' next victims.

On the one hand, investors are concerned by the EU's determination to get banks to share the burden of bailouts, even at the cost of triggering a Greek default. On the other, they see in EU disagreements over giving Greece more aid the ominous signs of a drop in commitment to the currency union.

The mix of uncertainty proved toxic for markets. The sell-off extended to Italy, one of Europe's stable core economies, which despite its high debt had so far escaped the turmoil that has crippled the eurozone for a year and a half.

The contagion "could mark the beginning of the end for the single currency union in its current form," Jonathan Loynes, economist at Capital Economics.

As so often before, the eurozone finance ministers were pushed into action only when the markets gave them no choice.

Italy's government sped up approval of its austerity plan and the EU opened the door for a complete overhaul of the region's bailout fund, which has so far focused on handing out rescue loans to countries on the brink of collapse in return for high interest rates and painful austerity measures.

The pledges calmed market nerves — for the day, at least. The euro bounced back above $1.40 from as low as $1.3885 in the morning and Milan's stock index swung to a 1.2 percent gain after being down as much as 4.4 percent.

"We said we are ready to test, whether, as part of the private sector involvement, an expansion of the toolkit is necessary and appropriate — such as prolonging (loan) maturities and lowering interest rates," said German Finance Minister Wolfgang Schaeuble. "Everything can help to improve debt sustainability and defend the euro as a whole."

Schaeuble did not exclude new powers for the eurozone's rescue funds, such as buying up the bonds of troubled countries on the open market, which could lower the debt weight and help stem market jitters, especially for a country like Greece, which few economists believe can stand on its own feet again without substantial additional support.

Until very recently, Germany, the eurozone's largest economy and the biggest contributor to the region's bailout fund, had firmly ruled out such expanded powers.

Schaeuble indicated that the heightened market panic may have led to a change in opinion. "We never before had such an intensive and honest debate over the real issues," he told journalists at the end of a two-day meeting with his counterparts in Brussels.

But while the promises of more support stabilized European markets by the close of the day on Tuesday, sentiment remains fragile as the eurozone's top officials — once again — remained thin on details and appeared to disagree among themselves.

Calm will return to markets only if "all the countries of the eurozone assume their responsibility, in particular the most powerful countries," Spanish Prime Minister Jose Luis Rodriguez Zapatero told reporters in Madrid.

The comment seemed to be a direct rebuke to German Chancellor Angela Merkel, whose reluctance to anger taxpayers at home has blocked previous efforts to get ahead of the debt crisis.

Because of the heightened tensions, this week could become crucial to the eurozone's ability to survive the crisis. EU President Herman Van Rompuy said there may be a special summit of EU leaders in Brussels Friday, the same day as the results of long anticipated bank stress test will be revealed.

While the finance ministers struggled in Brussels, Italy worked to restore confidence in its ability to tackle its debt pile, some 120 percent of economic output and one of the biggest in the eurozone.

Italian Premier Silvio Berlusconi said the government will bring forward the timetable it has for a raft of austerity measures, which are now meant to pass through parliament by Sunday, instead of waiting until August.

Berlusconi said in a statement that the turmoil in Italian financial markets in recent days has prompted the government to accelerate and strengthen the measures, so that the country can have a balanced budget by 2014.

"It is necessary to eliminate every doubt on the efficiency and credibility of the austerity measures," Berlusconi said in his first public comments since speculators started pushing up the interest rates Italy pays on its debt.

Berlusconi, who has been weakened in recent local elections and referendums on his policies as well as a sex scandal, expressed confidence that the government and opposition would work together "to defend the country."

The comments helped the Italian 10-year yield drop back down to 5.55 percent from above 6.0 percent earlier, while the Milan stock index turned positive to trade 1.2 percent higher — its first rise in days.

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Barry reported from Milan. David McHugh in Brussels, Maria Grazia Murru in Rome and Daniel Woolls in Madrid contributed to this story.

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